Why pile more pain on commuters, minister?

Tuesday 29 June 2010 09:59 BST

You could almost hear the sweltering commuters' collective intake of breath: yesterday's Standard informed them that some rail fares could rise by 10 per cent.

Anticipating a 25 per cent Budget cut, Transport Secretary Philip Hammond has said that while he is "hoping" to stick to the present annual fare-rise formula, he can't guarantee it. Without that restraint, rail travel could start to look distinctly bling. And that's a policy which penalises London.

The capital's commuters use trains far more often than those in the provinces: last year passengers in London and the South-East travelled more than twice as far as people on the whole of the regional rail network combined. Rail is an integral part of our city's transport system.

If ministers let train operators hike fares willy-nilly, at the same time as cancelling new carriages, it will hasten the seizing-up of the capital that we're already seeing thanks to interminable Tube engineering and out-of-control roadworks. And we already face above-inflation increases in Tube and bus fares.

Hammond's motive is simple. The biggest single item in his department's budget is its subsidy support for the rail industry, £5.21 billion-worth in 2008/09. By putting up fares faster, he can offload costs. Yesterday he was testing the water to see our reaction to passing more on — even though we already pay some of the highest rail fares in Europe.

Never mind the fact that, in theory, the coalition is in favour of greener transport. The chances of people taking the train rather than the plane for long journeys become even slimmer with higher fares.

It must be a bitter pill for Norman Baker, the Lib-Dem transport minister. In March, Baker asked Gordon Brown to scrap the RPI-plus-one per cent formula on the grounds that it entailed unjustly high fare increases. Since 2004, regulated fares such as season tickets have gone up each January by inflation (as measured by the Retail Price Index) plus one per cent. The Lib-Dem manifesto called for fare increases to be RPI minus one per cent.

Ministers' logic does nothing to address the craziness of a subsidy system that pours money into the pockets of train-operating companies in exchange for minimal risk.

Indeed, in addition to a total direct subsidy of around £2 billion a year, they get compensated for lower-than expected passenger numbers — say, if we suffer a recession. Thus last June, Stagecoach successfully sued the Department for Transport for £100 million of "revenue support".

So much for entrepreneurial risk-taking.Commuters are asked to take the pain, yet operators like the two running trains from my Herne Hill station won't feel a thing. First Capital Connect's parent company, First Group, made pre-tax profits in 2009/10 of £179.6 million; its chief executive, Sir Moir Lockhead, made £802,000 last year. Go-Ahead, which owns 65 per cent of Southeastern, made pre-tax profits for the second half of last year of £50 million.

Government has to save money. But this is short-sighted. Together with more crowded trains, big fare rises risk making this city a less attractive place to do business — as well as denting the disposable income of its workers. London's economy is the dynamo of the whole country, its only hope of recovery. What's Hammond going to do if it fails — get on the train to Leeds?